South Korea's top fixed-line operator, KT Corp., said Tuesday it will raise $1 billion by selling bonds to overseas investors as it aims to raise cash for debt payments in the coming months.

Of the amount, $650 million will mature in three years and the remaining $350 million in five years.

The three-year bonds will carry an interest rate 100 basis points above the yield on three-year U.S. Treasurys. The rate of the five-year bonds will be 110 basis points higher than the government bonds of the same maturity.

KT said the raised proceeds will be used to repay debts worth $600 million maturing in June. The company also holds 140 billion won ($134 million) debts maturing in August.

KT, also the country's No. 2 mobile carrier, said global credit appraisers such as Moody's and Standard & Poor's see the debt sales as acting positively on the company's balance sheet.

"The issuance aims to repay maturing debts," a financial official from KT said, denying assumptions in the market that it aims to secure cash for the upcoming restructuring program.

"It has noting to do with the company's voluntary retirement plan, as we still do not exactly know how many will apply nor how much money will be needed for compensations," the official said.

Last week, KT said it will allow employees who have worked 15 years or longer at the company to apply for retirement. Of its 32,000 workers, about 23,000 are estimated to be eligible for the voluntary retirement package. Applications will be accepted through April 24.

Industry watchers expect the restructuring program will cost KT around 1 trillion won in one-off expenditure for severance pay if 6,000 workers choose to leave as expected. The payment is likely to weigh down heavily on the company earnings for the second quarter of this year.

Due to the falling performance of its fixed-line business amid the boom of smartphones, KT logged a net loss of 60.3 billion won in 2013 despite efforts to improve its finances through other businesses such as car rentals. (Yonhap)